Massachusetts Courts Split on Nursing Home Arbitration Agreements

Nursing home admissions are often emotionally fraught: distressed family members are asked sign a stack of documents without having the time to review the forms or the opportunity to consult with counsel. Buried deep in the pile there is often an agreement requiring residents to submit all claims to “alternative dispute resolution.” Without realizing it, they may sign away all rights to a jury trial, including claims for serious injury, medical malpractice and wrongful death. Although nursing homes are prohibited from requiring residents to agree to arbitration as a condition of admission, such agreements are increasingly common.

If the party signing the agreement is a health care agent, rather than the resident herself, can the resident be compelled to arbitrate? In March 2012, two Massachusetts superior courts reached inconsistent answers to this question.

Plymouth Superior Court Judge Charles J. Hely held that an arbitration agreement signed by the resident’s health care agent was enforceable. Johnson v. Kindred Healthcare Citing the SJC’s ruling in Miller v. Cotter, 448 Mass. 671 (2007), which had upheld an arbitration agreement signed by a resident’s agent under a power of attorney, the court found that there was no requirement that an agent be acting under a power of attorney rather than a health care proxy in order to bind a resident to an arbitration agreement. In somewhat tortured reasoning, the court found that a decision to accept arbitration was “a decision about the patient’s health care,” and could therefore be made by the health care agent.

Suffolk Superior Court Judge Paul E. Troy reached a contrary conclusion in Licata v. GGNSC Malden Dexter LLC. Judge Troy persuasively reasoned that a decision to waive the resident’s right to a jury trial did not constitute a health care decision within the state’s health care proxy statute, and could therefore not properly be made by a health care agent. In other words, a health care agent has the authority to make treatment-related decisions, but not legal or financial ones.

The nursing home has already announced its decision to appeal the ruling in Licata, and it is likely that the resident will appeal the decision in Johnson as well. In the meantime, our firm’s durable power of attorney forms include a provision specifically barring an agent from agreeing to mandatory arbitration, and we will be adding similar language to our health care proxies as well. If a nursing home admission agreement is signed by an agent who lacks the authority to consent to arbitration, the resident cannot be bound by an arbitration clause.

There is no good reason for residents to “voluntarily” agree in advance to waive their rights to a jury trial: alternative dispute resolution is always an option once a dispute has arisen if the parties agree. Because the typical nursing home agreement requires a waiver of a fundamental constitutional right and deprives residents from the opportunity to have malpractice, wrongful death and other claims heard by a jury, residents should “just say no” to arbitration at admission. Those who may have already signed such agreements will likely need to await the outcome on appeal to find out whether the agreements are binding.